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Policy Impact On Production Structure And Income Risk On Polish Dairy Farms

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  • Was, Adam
  • Malak-Rawlikowska, Agata

Abstract

Likely policy changes leading towards further liberalisation of the Common Agricultural Policy would certainly influence farmers’ income and revenue risks. Thus, a question arises both for farmers and for policy makers about possible effects and necessary adjustments that should be made to face such changes. The paper examines long-term impacts of changes of key policy factors on income risk in Polish dairy farms. Deterministic linear programming farm model was used to estimate farm incomes and likely changes in production pattern, while stochastic simulation farm model was applied for examining income risk. The main results of this model chain are optimal production structures for farm types modelled in a set of assumed policy conditions as well as farm income and its volatility. Comparison of model results across scenarios allows to state that increase of milk quota and reduction of direct payments significantly decrease farm incomes on dairy farms in Poland. Full liberalisation of the Common Agricultural Policy and withdrawal of direct payments results with even more radical negative income effects especially in the cluster of smaller milk producers. Simulation indicates significantly increased risk of achieving low farm incomes.

Suggested Citation

  • Was, Adam & Malak-Rawlikowska, Agata, 2008. "Policy Impact On Production Structure And Income Risk On Polish Dairy Farms," 109th Seminar, November 20-21, 2008, Viterbo, Italy 44842, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa109:44842
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    File URL: http://purl.umn.edu/44842
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    as
    1. Moschini, Giancarlo & Hennessy, David A., 2001. "Uncertainty, risk aversion, and risk management for agricultural producers," Handbook of Agricultural Economics,in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 2, pages 88-153 Elsevier.
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    Keywords

    Milk quota; direct payment; income risk; farm model; policy changes; Agricultural and Food Policy; Consumer/Household Economics; Research Methods/ Statistical Methods; Q10; Q18;

    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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